5 Tips To Manage Debt If Your Mortgage Is Overwhelming
Written by
J. Arky
Edited by
Rebekah Evans
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According to AmeriSave Mortgage, 25% of homeowners reported in a survey that they are very stressed about debt but managing, with another 10% noting that they feel completely overwhelmed by how deep they are in their mortgage.
For many people, owning a home can be a dream come true that turns into a nightmare. Are you someone who feels like they are drowning in a mortgage and looking for some relief? Here are a few tips for how to manage the stressful debt that comes with owning a home.
Find Additional Income Sources
“Instead of worrying, talking about it and losing sleep over your financial situation, do your research and make a real plan to eliminate your debt,” said Kyle Enright, lending expert and president of lending at Achieve, a digital personal finance company. One way to do this is by finding some additional income to put towards the debt you’ve accumulated.
“This isn’t possible for everyone, but for some, it is,” Enright explained. “Many people have taken well-paying part-time jobs or developed a side gig (anything from babysitting to a creative business) to generate more money in order to pay off their debt and/or make ends meet.”
Apply for a Personal Loan
It might seem counterintuitive to get a loan in order to pay off another one, but there are some benefits to applying for a personal loan to obtain mortgage relief.
“If you have accounts with high interest rates (like credit card accounts), a personal loan may offer a lower rate,” Enright said. “You then can use the funds from the personal loan to pay off the high-interest debt and be left with just one loan at the lower rate.”
Use a Home Equity Line of Credit
Some homeowners who are struggling with paying monthly bills are also sitting on a wealth of home equity, according to Enright.
Enright described that if you meet the qualifications to tap into your home’s equity (HELOC), you could be able to access that equity and use the funds — albeit, very carefully — for essential expenses.
Debt Resolution and Management
In Enright’s professional opinion, settling a debt can be helpful for some people in major financial hardships due to significant changes in their life. This could include losing a job, expensive healthcare costs or the death of a loved one, to name a few. All of these scenarios could make minimum payments on a mortgage spin out of control.
“Regulated by the Federal Trade Commission, debt settlement companies work on a consumer’s behalf to lower principal balances,” Enright explained, who also noted that debt management might be another route to explore. “Debt management plans, offered by credit counseling firms, offer a slightly lower interest rate on a credit card.”
Ask for Professional Help
“In this situation, know that you’re not alone,” Enright said. “Acknowledge there’s a problem and that you are ready to take action. The right solution will be different for everyone, but there are alternatives.”
Some avenues to explore are working with a professional financial planner or money management expert to figure out a way to budget properly, work to pay down debt and not feel like you are under water with payments on your home.
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